Customs, Excise and Gold Tribunal - Mumbai
Silverchem Industries (Bombay), Pvt. ... vs Commissioner Of Central Excise on 31 December, 2004
Equivalent citations: 2005(98)ECC801, 2005(182)ELT51(TRI-MUMBAI)
ORDER Archana Wadhwa, Member (J)
1. Vide his impugned orders, the Commissioner of Central Excise has confirmed demand of duty of Rs. 55,95,794 (Rupees fifty five lakhs ninety five thousand seven hundred and ninety four only) against M/s. Silverchem Industries (Bombay) Pvt. Ltd. alongwith imposition of personal penalty of identical amount under the provisions of Section 11AC of Central Excise Act, 1944, read with Rule 173Q of erstwhile Rule of Central Excise Rules, 1944. In addition, personal penalty of Rs. 15 lakhs (Rupees fifteen lakhs) has been imposed upon the second appellants M/s. Pilot Cooking Gas Ltd., and of Rs. 15 lakhs (Rupees fifteen lakhs) on Shri Samir Ahmed Shaikh, Director of M/s. Silverchem Industries Bombay) Pvt. Ltd., under the provisions of Rule 209A of Central Excise Rules, 1944.
2. As per the facts on records, M/s. Silverchem Industries (Bombay) Pvt. Ltd., are engaged in the manufacture of Liquefied Petroleum Gas (LPG), hereinafter, referred to as LPG. The said LPG was being cleared by them on payment of duty and after availing the modvat credit of duty paid on inputs. The appellant's factory was visited by the Central Excise Officers on 13.11.2000, who conducted various checks and verifications and also took possession of various records. Scrutiny of the said records revealed that apart from clearing LPG on payment of duty the appellant was also engaged in trading of the said goods and was selling the same to one M/s. Pilot Cooking Gas Ltd. It was noticed that the majority of the sales of bulk LPG was to the said Pilot Cooking Gas Ltd. As per the appellants they had thirteen storage tanks at their premises situated at village Gothada and the LPG was being received in bulk from their suppliers, Reliance Industries Ltd., Indian Petro Chemicals Ltd., and Gas Authority of India Ltd. The goods were supplied to various suppliers, mainly bottlers engaged in filling LPG into gas cylinders of 12/15 kgs. Their major buyer M/s. Pilot Cooking Gas Pvt. Ltd., was supplying the LPG to their industrial customers. However, as the said buyer was not having any bottling facilities, they approached the appellants for settling a bottling plant at vacant place in the above premises, for which an agreement was drawn between the two against the payment of consideration.
3. It has been explained to us by the Ld. Advocate that they are purchasing ready to use LPG from the three main sources, i.e. RIL, GAIL and IPCL. Though, all the three companies supplied different types of LPGs i.e., Butane LPG, Propane LPG or C4 mix LPG, all the three are known as LPGs in the commercial market and are ready to use a Liquefied Petroleum Gas, without carrying out any further process on the same. However, in case of Butane LPG when temperature is low, for example, during winter; then its pressure decreases and in such case the pressure of butane can be increased simply by mixing of Propane LPG with Butane LPG. It is the appellant's case that though the said blending of Butane LPG with Propane LPG does not amount to manufacture, nevertheless whenever such blended LPG was cleared by them, the duty was paid on the same after availing modvat credit in respect of the LPG received by them from their suppliers.
4. The dispute in the present appeal relates to the facts that the LPG cleared by the appellants without payment of duty as re-sale of the bought out goods has not been accepted by the Commissioner as trading activity and it has been held that since the appellant was blending the two LPGs, they were required to pay duty in respect of clearances. The Commissioner has further held that since the majority of the sales were made to M/s. Pilot Cooking Gas Ltd., the value at which M/s. Pilot Cooking Gas Ltd., was selling the bottled LPG in the market should be picked up as the assessable value of the goods. On the other hand, the appellant's contention is that they were selling LPG in bulk to M/s. Pilot Cooking Gas Ltd., and further bottling of the LPG in their premises was in terms of the agreement and as it did not involve any manufacturing process, enhancement to the assessable value was not justified. The appellant's contention is that the reliance on the statements of various persons recorded during the course of investigation by the Commissioner is not based upon the proper interpretation of the same. Ld. Advocate has also drawn our attention to invoices under which the LPGs were received by them in support of his contention that it was the LPG, which was received by them from the suppliers and supplied as such to their customers without any further addition at their premises. He submits that there is nothing on record to show that such transactions were not trading activity. Merely because the appellants had the facility to add Propane LPG into Butane LPG so as to increase the pressure of the same does not lead to inevitable conclusion that in all those cases, the appellants had undertaken the said activity. Wherever they have done so, they had paid the duty after availing the modvat credit.
5. We agree with the above contention of the Ld. Advocate that the mere fact of having facility of blending two types of LPGs does not ipso facto lead to inevitable conclusion that such an activity has been carried out in respect of all the clearances. The records of M/s. Pilot Cooking Gas Ltd., have also not been examined and verified by the adjudicating authority. The agreement entered into between the two and what are terms and conditions of the same is also not available before us. As such, we are of the view that the matter needs to be re-examined by the adjudicating authority afresh, for which purposes, we set aside the impugned order and remand the matter to the Commissioner for de novo adjudication. We make it clear that we are not expressing any opinion on the other issue involved and also on the point of limitation.